Pulse of The People: Small Business Lending Enhancement Act deserves our support

Thursday, December 6, 2012

I am writing in response to the "About Small Business" Letter to the Editor from Frank Capaldo of the Independent Bankers Association of New York, which appeared in this morning's edition of The Record.

On behalf of New York's 421 credit unions, I strongly disagree with the opinions set forth by Mr. Capaldo. Once again, banks are opposing credit unions' efforts to help small businesses access credit to help them grow and create much-needed jobs without offering alternatives to address the reduction of business credit by banks as a result of the recession.

Mr. Capaldo states that the small businesses he spoke with claim they do not need access to more credit. How is it then that a recent poll commissioned by the American Sustainable

Business Council, the Main Street Alliance and the Small Business Majority found 90 percent of small business owners believe that the availability of small business loans is a problem, and 60 percent have faced difficulty trying to obtain loans that would grow their small business. Further, the survey found that 90 percent of small business owners support making it easier for community banks and credit unions to make loans to small businesses.

Mr. Capaldo incorrectly states that "this controversial proposal would benefit only a handful of overly aggressive, growth-at-all-cost credit unions," when in fact, nearly three-quarters of the credit unions constrained by the cap are smaller institutions with less than $500 million in assets. The current cap actually serves as an artificial barrier, discouraging numerous non-member business lending credit unions from entering the business lending market.

Credit unions have a long history of engaging in safe and sound business lending. They have been lending to their business-owning members since credit unions' inception in the United States over a century ago. Restoring credit unions' authority to fully serve business-owning credit union members makes good economic sense, not to mention that it wouldn't cost taxpayers a dime, expand the size of government, nor impact bank lending.

In fact, the Federal Reserve estimates that credit unions currently hold on average only about 5 percent of the small business loans held by depository institutions. The current version of the proposed legislation would continue to limit credit union's annual business loan growth. Therefore, the majority of any new lending could be accomplished without any reduction in bank loans. So why then are the banks complaining?

If Congress passes The Small Business Lending Enhancement Act, which increases the statutory cap on credit union business lending, credit unions could lend an additional $13 billion to small businesses, helping them create over 140,000 new jobs in the first year, according to the Credit Union National Organization,

Like Mr. Capaldo, I encourage you to contact your representatives. But, given the above information, I hope you will now do so in support of the Small Business Lending Enhancement Act.